I'm currently learning about lock box mechanisms for a deal I'm working on with a European acquirer. For those unfamiliar, the basic idea is this: you agree on a fixed purchase price based on a balance sheet at a specific historical date (the "lock box date"), and from that point forward the seller is essentially frozen out of pulling value from the business. No dividends, no inter-company transfers, no management fees above what's agreed. The buyer effectively owns the economic upside from the lock box date forward, even though closing happens weeks or months later. In exchange, the seller typically receives a daily interest accrual (the "ticker") to compensate for the time between lock box date and closing. Compare that to the North American norm, which most of us are probably more familiar with: you negotiate an estimated working capital target at signing, close the deal, and then true it up 60 to 90 days post-close once the actual closing balance sheet is finalized. The delta between estimated and actual working capital flows as a dollar-for-dollar price adjustment. My question for the group: what are the true economics of each approach, and which actually favors the buyer vs the seller in practice? A few specific things I'm curious about: - How does working capital get adjusted in the lock box mechanism? It doesn't seem to get adjusted at all in what I'm seeing. - For those who've done both, does the working capital peg/true-up actually produce better price certainty, or is it just familiar? - Anything I'm missing about lock box mechanisms? Curious if anyone in the Canadian or US lower middle market has actually encountered this, or if it's still largely a European convention at our deal sizes.